PUNE HOTELS ASSOCIATION - phapune.in by Mr Govind Goyal on Tax.pdf · sale of which is liable for...
Transcript of PUNE HOTELS ASSOCIATION - phapune.in by Mr Govind Goyal on Tax.pdf · sale of which is liable for...
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Hotels and Restaurants Association (Western India)
&
PUNE HOTELS ASSOCIATION
Seminar on Indirect Taxes
20th November 2014
VAT and Luxury Tax in the State of MaharashtraVAT and Luxury Tax in the State of MaharashtraVAT and Luxury Tax in the State of MaharashtraVAT and Luxury Tax in the State of Maharashtra
- Govind G. Goyal Chartered Accountant
Issues for Consideration:
Liability to pay Tax
Taxable Person?
Tax Event?
Tax Rate?
Taxable Value?
Hospitality: Whether Sales or Service?
Overlapping of Taxes
Type of organization and services offered: -
Star Hotels
Club Houses
Discotheques
Small Hotels – Guest Houses
Restaurants, Refreshment Rooms, Canteens, Eating Houses
Sweets & Farsan shops
Catering
Bakery
Taxability of: [?]
Room Rent
Food & Drinks
Liquor
Hiring of Tourist Vehicles
Banquet Services
Other related services
Hotels enjoying Tax Exemption
Supplies to Airlines, Railways
Outside Catering
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Basic Provisions in Brief:
VAT in Maharashtra
1. The system of Value Added Tax (VAT) has been implemented in the State of
Maharshtra, w.e.f. 01.04.2005.
2. The following Acts were repealed on introduction of VAT; -
(i) The Bombay Sales Tax Act, 1959, (BST)
(ii) The Maharashtra Sales Tax on the Transfer of Property in goods involved
in the execution of Works Contract (Re-enacted) Act, 1989.
(iii) The Maharashtra Sales Tax on the Transfer of the Right to use any goods
for any Purpose Act, (Lease Tax) and
(iv) The Bombay Sales of Motor Spirit Taxation Act, 1958.
Thus all transactions of purchase and sales of goods, within the State of
Maharashtra, which used to be covered under the above Acts, till 31st March
2005, are now governed by the Maharashtra Value Added Tax Act 2002, as
amended by Maharashtra Value Added Tax Amendment Bill 2005, now called
‘Maharashtra Value Added Tax (Levy and Amendment) Act, 2005’. (MVAT
Act). The Government has also notified Maharashtra Value Added Tax Rules
2005.
3. There is only one tax i.e. VAT
No separate Purchase Tax, Turnover Tax, Resale Tax, Surcharge, Works
Contract Tax, and Lease Tax etc.
4. No concessional forms such as Form 14, 14A, 14B, 13A, BC Form etc.
5. No Resales: All transactions of sales of goods, as well as deemed sale of
goods such as Works Contracts, Leases etc., by a dealer, within the State of
Maharashtra, are liable to tax under MVAT Act.
6. Immediate Input Tax Credit, in the month/quarter in which the eligible goods
purchased.
7. Composition Schemes for Retailers, Hoteliers, Caterers, Bakers, Contractors
etc.
8. CST continues for the time being.
9. Certain Employers liable to deduct TDS on Works Contracts.
10. Tax Payable by a dealer: -
VAT = Output Tax – Input Tax Credit – Credit b/f
Output Tax
The amount of tax collected/payable by a dealer on sales of goods effected
during the period. (Month/Quarter/Year)
Input Tax
The eligible amount of setoff of tax paid on purchases of goods, within the
State, during the same period.
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Credit C/f and Credit b/f
If the eligible credit for input tax is more than the output tax during a given
period, the same shall be carried forward to the next period
(Month/Quarter/Year), subject to certain restrictions.
Incidence and Levy of Tax
Liability of Dealers: Only a dealer is liable to pay tax (The term ‘dealer’ is
defined)
Registration of Dealers: Compulsory Registration, Voluntary Registration,
Eventual Registration.
Turnover limit for compulsory registration:
Category of
dealer
Total turnover
Turnover of taxable
goods purchased
or sold
Importer Rs. 1,00,000 Rs. 10,000
Others Rs. 5,00,000
(Rs. 10,00,000
w.e.f. 26.06.2014)
Rs. 10,000
Levy of Tax: Tax on sale of Goods within the State (and also on purchase of
certain notified goods). Sale includes deemed sale.
Tax Exempt Goods
No Tax payable on sales/purchase of specified commodities.
Taxable Goods Value Added Tax (sales tax) shall be levied on the turnover of sales of goods
(and on purchase of certain notified goods) at such rate as specified in
respective schedules.
Rate of Tax (As per Schedules)
Schedule ‘A’ – Essential Commodities (Tax free) Nil
Schedule ‘B’ – Gold, Silver, Precious Stones, Pearls etc. 1%
Schedule ‘C’ – Declared Goods, Industrial Inputs, and
Such other specified goods 5%
Schedule ‘D’ – Foreign Liquor, Country Liquor,
Motor Spirits, etc. at specified rates
Schedule ‘E’ – All other Goods (not covered by A to D) 12.5%
VAT not applicable
(1) The transactions covered by the CST Act are outside the scope of levy of local
sales tax or state level VAT. Therefore, The provisions of State Value Added Tax
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Act, Rules and/or Notifications, in respect of levy or imposition of tax, are not
applicable in respect to any sale or purchase of goods, where such sale or purchase
takes place: -
(a) (i) outside the State ; or
(ii) in the course of the import of the goods into the territory of India, or the
export of the goods out of such territory ; or
(b) in the course of inter-State trade or commerce.
(2) The State Government is empowered to exempt from payment of tax certain
class or classes of sales of goods made by certain class or classes of dealers.
Input Tax Credit (Set Off): -– [Sec 48, Rules 51 to 56]
Eligibility: – All registered dealers, whether manufacturer or traders, are eligible to
take full set off of the taxes paid on inputs; i.e., Value Added Tax paid, within the
State of Maharashtra, on purchases of Raw Material, Finished Goods and Packing
Material.
Entry Tax: – The amount of entry tax, paid by a registered dealer on the goods the
sale of which is liable for VAT under MVAT, will be eligible for full set off.
ITC on Capital Goods: – Tax paid on certain items of capital goods (defined) such
as machinery, components, parts and spares etc. are also eligible for full set off. (On
certain other items of capital assets such as furniture and fixtures, office equipments,
etc. setoff is admissible, subject to retention at prescribed rate, w.e.f. 08/09/2006.)
ITC on Miscellaneous Goods: – The amount of VAT paid on purchase of
miscellaneous goods, debited to Profit & Loss A/c (such as printing and stationery,
repairs, sales promotion etc.) also eligible for full set off.
ITC on Fuel: – Tax paid on purchase of goods, which is used as fuel, shall be eligible
for set off, in excess of 4%. [@ 3% w.e.f. 01.04.2007]
Reduction in set off: (provisions as on this day): The amount of set off, available to a
registered dealer, shall be reduced to the extent as provided, under the following
circumstances: -
(i) 3% of the purchase price of respective goods, if taxable goods used as fuel.
(ii) 2% of the purchase price of respective goods, if taxable goods used in
manufacture of tax-free goods.
(No such reduction, if tax free goods so manufactured are exported out of India).
(iii) 2% of the purchase price of respective packing material used in the packing of
tax-free goods. (No such reduction, if such packing material is used in packing
of tax free goods exported out of India).
(iv) 4% of the purchase price of respective goods, if taxable goods sent to any other
State in India as Branch Transfer or on Consignment.
(No such reduction if such branch transferred goods is received back in the State
within a period of 6 months whether after processing or otherwise).
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(v) Specified percentage of set off, if taxable goods used in Works Contract for
which the dealer has chosen to pay tax under the Composition Scheme.
(Reduction @ 4% of purchase price in respect of goods used in notified
construction contracts. And in case of other contracts: @ 36% of eligible
amount of setoff).
(vi) In case of dealers, whose total receipts on account of sale are less than 50% of
total gross receipts of business then set off is restricted to corresponding
purchases, which are sold (or consigned outside the State by way of stock
transfer) within 6 months from the date of purchase. And also on the purchases
of packing material used for packing of such goods sold, resold or consigned.
For Dealers, who are manufacturer of goods (w.e.f. 08.09.2006)
The dealers, covered by this rule, who are manufacturer of goods (other than
those who are principally engaged in doing job work) shall be entitled to claim
setoff on purchases of plant & machinery which are treated as capital assets, and
on purchases of parts, components and accessories of the said capital assets, and
on purchases of consumables, stores and packing material in respect of a period
of three years starting from the end of the year commencing the date of effect of
certificate of registration. [Inserted vide notification dated 23.10.2008]
For Hotel or Club (w.e.f. 08.09.2006): -
In case of Hotels and clubs covered by this Rule, who have not opted for
composition, shall be entitled to claim setoff only;
(a) on the purchases corresponding to the food and drinks (whether
alcoholic or not) which are served, supplied or, as the case may be,
resold or sold, and
(b) on the purchases of capital assets and consumables pertaining to the
kitchen and sale, service or supply of the said food or drinks.
(vii) In case of closure of business, the set off on goods held in stock (other than
capital assets), on the date of closure, to be disallowed and accordingly be
reduced fully.
(viii) 3% of the purchase price of office equipment, furniture & fixture treated by the
claimant dealer as capital assets.
(ix) 2% of purchase price of goods which are used in the distribution or transmission
of electricity (including the goods treated as capital assets), if the claimant
dealer is holding a licence for transmission or distribution of electricity under
the Electricity Act, 2003.
(x) Setoff to Textile processors: …. ( Inserted vide notification dated 23.10.2008)
Wherever such reduction in set off is required to be done, it shall be done in the tax
period in which such contingency arises.
If, for the purpose of reduction of set off, wherever required, it is not possible to
identify the corresponding purchases then proportionate reduction on FIFO basis.
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Condition for grant of set off
(1) Set off to be allowed only to a registered dealer.
(2) A valid Tax Invoice is must to claim set off.
(3) Proper maintenance of account of all the purchases in a chronological order
stating therein the date on which the goods so purchased, the name and
registration number of the selling dealer, tax invoice number & date, the amount
of purchase price paid and the amount of tax paid separately.
(4) The set off on eligible goods, purchased on or after 1st April 2005, has to be
claimed in the tax period in which the goods has been purchased (entered in the
books of account).
(5) The set off on opening stock (closing stock as on 31-3-2005) has to be claimed
in the first return to be filed for the tax period commencing 1st April 2005.
(6) The set off on eligible assets, held in stock as on 31st March 2005, and sold on
or before 31st December 2005, to be claimed in the tax period in which such
assets have been resold.
(7) In case of newly registered dealers, setoff can be claimed on the goods
(including capital assets) purchased before the date of registration, within the
same financial year, provided that the goods so purchased is not sold or disposed
off before the date of registration. (Effective from 08.09.2006)
No set off: - No set off, under any Rule shall be admissible in respect of;
(a) Purchase of passenger motor vehicles and parts components, accessories thereof.
(b) Purchase of motor spirit by any dealer other than a dealer in motor spirit.
(c) Purchase of Crude Oil, used by an oil refinery for refining.
(d) Any purchase of consumables or capital assets by a job worker (pure labour
job), whose only sales are waste or scrap of goods obtained from such labour
job.
(e) Any purchase made by a dealer holding Entitlement Certificate under a Package
Scheme of Incentives (except
the Entitlement Certificate under the New Package Scheme of Incentive for To
urism Projectsâ1999). As such units are entitled for refund of tax paid on
purchases).
(f) Any purchase of goods of incorporeal or intangible nature other than:
(i) Import Licences, Export Permits/licenses or Quota, DEPB and SIM Cards.
(ii) Soft wares in the hands of a trader in Soft wares.
(iii) Copyrights, if resold within 12 months from the date of purchase.
(iv) Duty Free Replenishment Certificate (DFRC), w.e.f. 01.04.2007.
Except above, all other intangible goods are debarred from setoff.
(g) Tax paid by way of works contracts in the erection of immovable property
(other than plant & machinery).
(h) Purchases of building material used in the erection of immovable property (other
than plant & machinery). However, a contractor, who undertakes construction of
immovable property by way of works contracts, is eligible to claim setoff on
purchase of such goods.
(i) Purchase of liquor (covered under entries 1, 2 and 3) or, as the case may be, Wine
(as covered under entry 3A) of Schedule ˜D” appended to the Act except
when the said goods are -
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(i) sold in the course of inter-State trade or commerce or in the
course of export out of the territory of India or are sent, not by
reason of sale, outside the State to any place within India by the
claimant dealer to his own place of business, or the place of
business of an agent or where the claimant dealer is a
commission agent, to the place of business of his principal; and
(ii) sold from customs bond to foreign going ships and aircrafts.]
(j) Purchases of mandap, tarpaulin, pandal, shamiana, etc. where the dealer has opted
for composition u/s 42(4).
(k) Purchases made on or after 1st April 2005 by a hotelier, which are treated by him
as capital assets and which do not pertain to supply by way of or as part of
service or in any other manner whatsoever of goods being food or other articles
for human consumption or any drink (whether or not intoxicating) where such
supply or service is made or given for cash, deferred payment or other valuable
consideration.
It may further be noted that
(a) Small dealers/retailers, hoteliers, caterers, bakers, mandap decorators etc.,
opting for Composition Scheme, u/ss. 42(1), 42(2) and 42(4) of MVAT Act, are
not entitled for any set off.
(b) There is no set off of CST paid on inter state purchases.
(c) There is no set off for any other taxes paid such as excise duty, import duty,
service tax, octroi, LBT or such other levy or levies.
Credit C/f and Credit B/f: – If during a tax period (month/quarter/six months) the
tax on total turnover of sales is less than the amount of input tax credit, then such
excess amount of credit may either be adjusted by the dealer against his tax liability
under the CST Act for the same period or may be c/f to the next period. The
unadjusted credit c/f of one period shall become the credit b/f for the next period. The
excess credit may be carried forward in this manner till the end of the accounting
year. The balance, if any, thereafter shall be claimed as a refund from the department.
However, w.e.f. financial year 2012-13, excess credit in the last return of a financial
year can be carried forward to next financial year, if such excess credit does not
exceed Rs. 500000/-.
Tax Invoice, Bill or Cash Memorandum
Section 86 of MVAT Act requires that a registered dealer, shall in respect of every
sale made by him issue either a tax invoice or bill or cash memorandum as provided
hereunder: -
Tax Invoice
Essential ingredients of a Tax Invoice: – Under the scheme of VAT, the most
important document is “tax invoice”. A registered dealer is entitled to claim set off
only on the basis of a valid tax invoice. Set off is not available on purchases affected
through a bill or cash memorandum. A ‘Tax Invoice’ is must to claim input tax credit
(set off). To be a valid tax invoice, section 86(2) provides that it shall contain the
following particulars: –
(i) The word Tax Invoice in bold letter at the top or at a prominent place.
(ii) Name, Address and Registration Number (TIN) of Selling Dealer.
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(iii) Name and Address and registration number (TIN) of the Purchasing Dealer.
(iv) Serial Number and Date.
(v) Description, Quantity and Price of the Goods sold.
(vi) The amount of tax charged, to be shown separately.
(vii) Signed by the selling dealer or a person authorized by him.
(viii) A declaration u/r 77(1).
Bill or Cash Memorandum
Section 86(6) requires every registered dealer to issue, at his option, either a Tax
Invoice or Bill/Cash Memorandum, for every sale made by him.
(Issue of bill/ cash memorandum or Tax Invoice, as the case may be, is mandatory for
each transaction of sale exceeding Rs. 50/-).
The dealer, choosing to issue Tax Invoice must comply with the requirements
prescribed in sec. 86(2), enumerated above.
The dealers, who have opted for Composition Scheme u/ss. 42(1), 42(2) or 42(4), are
not entitled to issue a Tax Invoice. Such dealers shall issue a Bill or Cash
Memorandum.
A bill or cash memorandum should be serially numbered, dated and signed by the
dealer or his servant or manager. Such bill or cash memorandum shall contain such
particulars as may be required/as may be prescribed. It shall also contain a declaration
as provided u/r 77(3).
A duplicate copy of all such bills/cash memorandum or Tax Invoice is required to be
preserved for a period of eight years from the end of the year in which sale took place.
Composition Schemes
Section 42 provides for Composition Schemes for various classes of dealers, as may
be notified by the State Government from time to time. The dealers opting for such
composition schemes shall pay tax at such rates, with such conditions, as may be
prescribed in the scheme. Accordingly the Government of Maharashtra has notified
different types of composition schemes for following classes of dealers: –
(1) Restaurants, Clubs, Hotels and Caterers (2) Bakers (3) Retailers and (4) Dealers
in 2nd Hand Motor Vehicles and (5) Dealers, who are in the business of giving
on hire (leasing) of mandap, shamiana, tarpaulins, etc.
Deemed Sales Transactions:
Tax on Right to Use Goods (Leasing and Hire Charges)
Earlier the tax on leasing and/or hire charges was payable under the provisions of
Maharashtra Tax on Transfer of Right to Use Goods Act. But now, as there is no
separate Act, all such transactions of deemed sale shall be liable to tax under MVAT
Act at the same rate of tax as prescribed in the aforesaid schedules. The taxable
turnover for such transactions shall be the amount of lease rental received or
receivable for the Tax Period.
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It may be noted that all kinds of hiring services are not liable to tax under MVAT. It is
only those transactions where there is ‘Transfer of Right to Use Goods’ and,
therefore, falling under the category of deemed sale.
Works Contracts
As there is no separate Act governing works contract transactions, all such
transactions are now taxable as deemed sales under the MVAT Act. The rate of tax,
on such deemed sales of goods, used in the execution of works contract, shall remain
same as prescribed in the aforesaid schedules to the respective goods. However the
sale price of such goods has to be determined in accordance with the provisions
contained in Rule 58 of the Maharashtra Value Added Tax Rules, 2005.
Works Contract – Composition Schemes
Section 42(3) provides for a Works Contract Composition Scheme, whereby a dealer,
at his option, may choose to pay tax @ 5% on Construction Contracts (as notified)
or in case of other contracts @ 8% on the total contract value. (After deducting
there from the amount paid towards sub-contract, if any.)
Works Contract – TDS Provisions
Section 31 provides that the Commissioner may, by notification, require any dealer or
person or class of dealers or persons (hereafter referred as ‘the employer’) to deduct
tax on such amount payable on the purchases effected by them, as may be notified.
All such employers shall have to: –
(a) Deduct tax, at prescribed rate, from the amount paid or payable to a contractor
during a given period.
(b) Deposit the amount so deducted with the Govt. treasury within 21 days from the
end of month in which such tax deducted or required to be deducted.
(c) Issue a certificate of deduction of tax, immediately, in Form 402.
(d) Maintain necessary records in prescribed format, Form 404.
(e) Submit Annual Return within three months from the end of year to which such
return relates i.e. by 30th
June of next financial year. This return is now e-return
(Form 424)
Notes:
1. The TDS provisions are applicable only to specified employers.
2. A contractor, awarding sub-contracts, is not required to deduct TDS from such
sub-contractor/s.
3. TDS provisions are not applicable in respect of works contract liable to tax
under the CST Act.
4. TDS not required to be deducted where the amount or the aggregate of the
amount payable to a dealer by such employer is less than rupees 5 lacs during
the financial year.
5. TDS is required to be deducted on the amount paid/payable in respect of
works contract. Thus TDS not to be deducted on taxes (whether VAT or
service tax) charged separately by the contractor.
6. No TDS on advance payments, however TDS on such advances to be
deducted at the time when such advance is adjusted towards the amount
payable.
7. A contractor can apply in Form 410 for a certificate of no deduction of tax at
source if the contract is not a works contract.
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Rate of TDS
TDS has to be deducted @ 2% if the contractor is a registered dealer under MVAT
Act, otherwise @ 5%.
Determination of Sale Price in certain cases
Sale of Food by Residential Hotels
Rule 59 provides for determination of taxable turnover of sales/service of food &
drinks in case of residential hotels charging composite amount, for lodging and
boarding, which is inclusive of breakfast, lunch, or dinner or any such combination.
The turnover in such cases has to be determined by applying specified percentage on
the amount of such composite charges.
Reduction in Sale Price in certain cases
If a dealer has chosen not to collect tax separately from its customers, the tax payable
by him on the turnover of sales shall be calculated by reducing from the turnover of
sales an amount arrived at through the following formula:– [R. 57 (1)]
Sale Price * Rate of Tax/100+Rate of Tax
Filing of Returns and payment of Taxes
Every registered dealer is required to file correct, complete and self-consistent return,
in prescribed form, by the due date. (Different forms for different category of dealers -
Forms 231 to 235)
Periodicity and due date:
A. Dealers to file half yearly returns: within 30 days from the end of six monthly
period:
(1) Retailers opted for composition Scheme
(2) Tax liability, in the previous year, up to Rs. 1 lakh or Refund entitlement
up to Rs. 10 lakhs.
B. Dealers to file Quarterly returns: within 21 days from the end of quarter
(1) Tax liability, in the previous year, exceeds Rs. 1 lakh but up to Rs. 10
lakhs or refund entitlement exceeds Rs. 10 lakhs but up to Rs. 1 crore
(2) Newly registered dealers (during the first year of registration)
(3) Dealers under Package Scheme of Incentive
C. Dealers to file Monthly returns: within 21 days from the end of each month
All other dealers, whose tax liability in the previous year exceeds Rs. 10 lakhs
or refund entitlement exceeding Rs. 1 crore.
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Note: The returns, whether monthly, quarterly or six monthly have to be uploaded in
electronic format only. A grace period of 10 days, from the end of due date, has been
provided for uploading e-returns vide Trade Circular Nos. 16T of 2008, dated 23-4-
2008 and 31T of 2008, dated 8-9-2008. It has further been clarified through Trade
Circular 15T of 2009, dated 21/04/09 that even Nil payment returns and returns
having refund claim or credit c/f can also be uploaded within this grace period of 10
days.
Tax Liability for the purpose means aggregate of taxes payable by a registered dealer,
in respect of all places of business within the State of Maharashtra, under the Central
Sales Tax Act and MVAT Act after adjustment of amount of set off claimed.
As per Rule 17 of MVAT Rules, the Commissioner of Sales Tax is empowered to
determine periodicity for different classes of dealers. Accordingly, the sales tax
department determines, from time to time, periodicity of returns of all dealers and the
same is made available on its website (mahavat.gov.in). The dealers are required to
file return as per the periodicity determined by the department.
Late Fees: Non-filing or late filing of returns attracts mandatory late fees of Rs.
5,000/- per return, w.e.f. 1st August 2012. The provision for Late Fees has been
recently amended w.e.f. 1st July 2014. The amended provision now provides that if a
dealer files return within 30 days from the due date of filing the return the late fee
shall be Rs. 2000/- and in all other cases it shall be Rs. 5000/-.
E-return Annexure: It is now mandatory to upload e-return annexure before uploading
periodic returns.
Payment of Tax:
A dealer shall first make payment of tax due in to the Government treasury (Form
MTR-6 for e-payment), and thereafter upload the return in appropriate form as may be
applicable. It may be noted the tax due, if any, has to be paid within the prescribed
due date of 21/30 days as the case may be. (There is no grace period for payment of
tax).
It may further be noted that it is now mandatory for all the dealers to make payment
of taxes electronically (except in certain case of six monthly returns, where tax can be
deposited with certain branches of State Bank of India).
In case of delayed payments, interest is payable @ 1.25% p.m. or part thereof. Such
interest is mandatory and shall be paid before filing of return.
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LUXURY TAX
Luxury Tax, in Maharashtra, is levied under the provisions of “The Maharashtra Tax
on Luxuries and Tax by Way of Cess on Other Facilities, Services, Enjoyments,
Utilities, Consumption, etc. Act 1987”. Earlier the Luxury Tax was applicable on
certain categories of goods also but now it is applicable to hotels only.
Basic Provisions in brief
Important Definitions: (Section 2)
(b) "business" includes
(i)the activity of providing residential accommodation and any other service in
connection with or incidental or ancillary to such activity of providing
residential accommodation, by a hotelier for monetary consideration;
(ii)any supply in a club whether or not incorporated by way of or as part of
any service or in any other manner whatsoever of goods, being food or
any other article for human consumption or any drink (whether or not
intoxicating), where such supply or service is made or given for cash,
deferred payment or other valuable consideration;
whether or not such activity, other services or supply is carried on with a
motive to make gain or profit and whether or not any gain or profit accrues
from such activity, other services or supply,
(b-1A) "Certificate of Entitlement" means a Certificate issued by the Commissioner in
respect of Luxury Tax Incentives by way of exemption from the tax liability
under the Package Scheme of Incentives for Tourism, 1993 or the New
Package Scheme of Incentives for Tourism Projects, 1999 or, the new
package Scheme of Incentives for Tourism Projects, 2000 [or the Tourism
Policy 2006];
(b-1) "club" includes both an incorporated and unincorporated association of persons,
by whatever name called;
(d-1) "Eligibility Certificate" means a certificate issued by the Maharashtra Tourism
Development Corporation under the Package Scheme of Incentives for
Tourism, 1993,or the New Package Scheme of Incentives for Tourism
Projects, 1999 or, the New Package Scheme of Incentives for Tourism
Projects, 2000, [or the Tourism Policy 2006];
(d-2) "Eligible Unit" means the unit in respect of which an Eligibility Certificate is
issued;]
(e) "hotel" includes-
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(i)a residential accommodation, a club, a lodging house, an inn, a public house
or a building or part of a building, where a residential accommodation
is provided by way of business; and
(ii)a club where supply is made or given of goods, being food or any other
article for human consumption or any drink (whether or not
intoxicating) by way of or as part of any service or in any other manner
whatsoever, for cash, deferred payment or other valuable consideration
by way of business;
(f) "hotelier" means the owner of the hotel and includes the person who for the time
being is incharge of the management of the hotel ;
(g) "Luxury provided in a hotel" means-
(i) accommodation and other services provided in a hotel, the rate or charges
for which including the charges for air-conditioning, telephone,
television, radio, music, entertainment, extra beds and the like, exceeds
rupees two hundred or more, per residential accommodation per day;
and
(ii) any supply in a club by way of or as part of any service or in any other
manner whatsoever, of goods, being food or any other article for
human consumption or any drink (whether or not intoxicating), where
such supply or service, is for cash, deferred payment or other valuable
consideration;
(h) "person" includes any company, club or association or body of individuals
whether incorporated or not, and also a Hindu undivided family, a firm, a local
authority, a State Government and the Central Government;
(i) "place of business" includes an office, or any other place which is used by a
person for the purpose of his business or where he keeps his books of
accounts;
(k) "receipt"
• in relation to a hotelier means the amount of valuable consideration received
or receivable by a hotelier or by his agent for any luxury provided in a hotel;
and .............”
Incidence and Levy of tax: (Section 3)
(1) Subject to the provisions of this Act and the rules made there under there shall be
levied a tax on the turnover of receipt of a hotelier,
(2) There shall be levied a tax on the turnover of receipts in respect of luxuries
covered by sub-clause (i) of clause (g) of section 2 at the following rates, namely,
(a) Where the charge for luxury provided in a hotel does not exceed two hundred
rupees per day per residential accommodation - -Nil
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(b) Where the charge for luxury provided
in a hotel exceeds two hundred rupees
per residential accommodation, but
does not exceed twelve hundred
rupees per day per residential
accommodation
4 per centum of such turnover of
receipt
(c) Where the charges for luxury
provided in a hotel exceeds twelve
hundred rupees per day per residential
accommodation
10 per centum of such turnover of
receipts
Provided that, where the charges are levied otherwise than on daily basis, then the
charges for determining the tax liability under this section shall be computed
proportionately for a day per residential accommodation, based on the total period of
such accommodation for which the charges are made.
There shall be levied a tax at the rate of 12% on the turnover of receipts in respect of
luxuries covered by sub-clause (ii) of clause (g) of section 2.
(3) Where, in addition to the charges for luxury provided in a hotel, service charges
are levied and appropriated by the hotelier and not paid to the staff, then such charges
shall be deemed to be part of the charges for luxury provided in the hotel.
(4) w.e.f. 1-9-1990.
(5) Where luxury provided in a hotel for a specified number of persons is shared by
more than the number specified, then, unless the additional person is a child
occupying the room along with his parent or guardian and no separate charge is
recovered for the child, in addition to the tax levied for luxury provided to the
specified number of person, there shall be levied and recovered separately the tax in
respect of the charges made for the extra persons accommodated.
Explanation;- For the purpose of this sub-section. "child" means a person who has not
completed twelve years of age.
(6) The tax shall not be levied and payable in respect of the turnover of receipts for
supply of food and drinks, on the sale of which the hotelier has already paid the tax
under the Bombay Sales Tax Act, 1959.
(7) For the purpose of this Act, Tax collected separately by the hotelier shall not
be considered to be part of the receipt or the turnover of receipt s of the hotelier.
Registration: (Section 8)
(1) No hotelier or tobacconist liable to pay tax under this Act shall conduct or cause to
be conducted business unless he possesses a valid certificate of registration as
provided by this Act:
15
Provided that, it shall be lawful for the hotelier or, as the case may be, tobacconist to
conduct or cause to conduct business if the hotelier or the tobacconist has applied for
registration as provided by this act.
(2) Every hotelier and every tobacconist required to possess a certificate of
registration shall apply to the Commissioner within thirty days from the date on which
the hotelier or, as the case may be, tobacconist first becomes liable to pay tax.
The applicable rates of tax, with effect from 1-7-2014, are as under:
Charges for luxury provided in a hotel per residential accommodation per day
Up to Rs. 1,000/- Nil
From Rs. 1,001/- to Rs. 1,500/- 4%
Exceeding Rs. 1500/- 10%
It may be noted that:
Earlier the rates of tax from 29th
April 2010 till 30th
June 2014 were as follows:-
Up to Rs. 750/- Nil
From Rs. 751/- to Rs. 1,200/- 4%
Exceeding Rs. 1200/- 10%
Where the charges are levied otherwise than on daily basis then for computation
of tax charges shall be computed proportionately for a day per residential
accommodation, based on total charges for that period.
Tax under this Act shall not be levied on the turnover of receipts for supply of
food and drinks, on which hotelier has to pay sales tax under MVAT Act, 2002.
Tax collected separately by the hotelier under this Act shall not be considered to
be part of the turnover of receipts by the hotelier.
A hotelier having even one room with charges more than Rs. 1,000/- per day per
accommodation would be liable to pay tax, hence liable for registration.
Maintenance of Accounts: Every hotelier shall maintain:
1. Information of residential accommodation and tariff thereof in Form 1.
2. Daily accounts of occupation of residential accommodation in the hotel and
collection of tax thereof in Form 2 and
3. Monthly abstract of collection and remittance of tax in Form 3. The register in
Forms 1, 2 and 3 shall be certified by an officer duly authorised by the
Commissioner.
However, the Commissioner of Luxury Tax, vide Circular No. 4/1988 dated 24-2-
1988, has clarified that hotelier may maintain one register only (instead of three
separate registers). At the time of Registration, the register/s shall be signed and
sealed by registering authorities. Thereafter new register shall be signed and
sealed by assessing authorities.
16
Exemptions from Luxury Tax: Various Notifications have been issued, from time to
time (u/s. 22) for granting exemptions to certain specified persons or class of persons
from Luxury Tax in hotels.
Filing of Returns and Payment of Tax
Due Dates:
A. Annual Return: 30th
April of succeeding year
B. Quraterly Returns: April-June: 31st July
Jul-Sep: 31st Oct
Oct-Dec: 31st Jan
Jan-Mar: 30th
Apr
C. Monthly Returns: By the last date of next month
Periodicity:
1. Tax liability more than Rs. 20000/- in the previous year: Monthly
2. Tax liability in previous year between Rs 5001/-and Rs 20000/-: Quarterly
(and also monthly returns for the months of January and February)
3. Tax liability in previous year up to Rs 5000/-: Annual
4. If annual tax liability in previous year was less than Rs. 5000/- but exceeds in
current year: first return from 1st April to end of quarter in which it so
exceeds, thereafter quarterly.
5. If tax liability in current year exceeds Rs. 20,000/- then quarterly returns till
the end of quarter in which such liability exceeds, thereafter monthly.
6. Special provision for filing the returns for the first year from obtaining
registration certificate (Rule 17):
Notwithstanding anything contained in rule 12 or 13, every registered hotelier
to whom registration certificate is granted for the first time under the Act,
shall, until the expiry of a period of twelve months from the date of the grant
thereof, furnish monthly returns, and each such return shall be furnished on or
before the last day of the month immediately succeeding.
Reduction of receipt for levy of tax- (Rule 18) A registered hotelier may, in respect
of any receipt on which luxury tax is payable by him, either,
(i)exclude the amount, if any, collected by him separately by way of tax from
the receipt on which tax is leviable; or
(ii) where the tax is not separately collected, deduct from the receipt as per
tariff charged, a sum calculated in accordance with the formula given
in the Table hereunder:-
17
[TABLE
The formula shall be as follows:-
R Receipt multiplied by
100+R
where 'R' means the rate of
tax.]
Preservation of books of accounts, registers, etc (Rule 37): Every registered hotelier and every hotelier on whom a notice has been served under
sub-section (1) of section 29, shall preserve all books of accounts, registers and other
documents including bills, cash memoranda, invoices, vouchers and other documents
relating to the receipts, for a period of not less than five years from the expiry of the
year to which they relate.
E-payment facility: Refer Circular No. 16T of 2014 dated 17/09/2014 on the subject
“Providing e-payment facility for Profession Tax, Luxury Tax and Sugarcane
Purchase Tax through GRAS.
Incentives under Tourism Policy 2006:- Refer various Notifications and also recent
Trade Circular No. 15T of 2014 dated 06/08/2014. (New section 22B inserted on 26th
June 2014, vide Maharashtra Act No XXVII of 2014).
18
Annexure-1
Some Important Definitions under MVAT Act
DEALER
According to section 2(8) of MVAT Act “dealer” means any person who for the purposes of
or Consequential to his engagement in or, in connection with or incidental to or in the course
of his business buys or sells goods in the State whether for commission, remuneration or
otherwise and includes;
(a) a factor, broker, commission agent,
(b) an auctioneer
(c) a non resident dealer or as the case may be an agent, residing in the State, of a non-
resident dealer,
(d) any society, club or other association of persons
Explanation- For the purposes of this clause, each of the following persons, bodies and
entities who sell any goods whether by auction or otherwise, directly or
through an agent for cash, or for deferred payment, or for any other valuable
consideration, shall, notwithstanding anything contained in any other
provision of this Act, be deemed to be a dealer, namely: -
(i) Customs Department of the Government of India administering the Customs Act,
1962;
(ii) Departments of Union Government and any Department of any State Government;
(iii) Local authorities;
(iv) Port Trusts;
(iv-a) Public Charitable Trust
(v) Railway Administration as defined under the Indian Railways Act, 1989 and Konkan
Railway Corporation Limited;
(vi) Incorporated or unincorporated societies, clubs or other associations of persons;
(vii) Insurance and Financial Corporations, institutions or companies and Banks included
in the Second Schedule to the Reserve Bank of India Act, 1934;
(viii) Maharashtra State Road Transport Corporation constituted under the Road Transport
Corporation Act, 1950;
(ix) Shipping and construction companies, air transport companies, airlines and
advertising agencies;
(x) Any other corporation, company, body or authority owned or constituted by, or
subject to administrative control, of the Central Government, any State Government
or any local authority:
Exception I. — An agriculturist, who sells exclusively agricultural produce grown on land
cultivated by him personally, shall not be deemed to be a dealer within
the meaning of this clause.
Exception II. —An educational institution carrying on the activity of manufacturing, buying
or selling goods, in the performance of its functions for achieving its
objects, shall not be deemed to be a dealer within the meaning of this
clause.
Exception III. —A transporter holding permit for transport vehicles (including cranes)
granted under the Motor Vehicles Act, 1988, which are used or adopted
to be used for hire or reward shall not be deemed to be a dealer within the
meaning of this clause in respect of sale or purchase of such transport
vehicles or parts, components or accessories thereof.
19
PERSON
According to section 2(17) of MVAT Act, “person” includes an individual, any State
Government, the Central Government, any company or society or club or association or body
of individuals whether incorporated or not, and also a Hindu Undivided Family, a firm and a
local authority and every artificial juridical person not falling within any of the preceding
descriptions;
BUSINESS
Section 2(4) defines “business” to include;
(a) any service;
(b) any trade, commerce or manufacture;
(c) any adventure or concern in the nature of’ service, trade, commerce or manufacture;
whether or not the engagement in such service, trade, commerce, manufacture, adventure
or concern is with a motive to make gain or profit and whether or not any gain or profit
accrues from such service, trade, commerce, manufacture, adventure or concern.
Explanation. For the purpose of this clause;
(i) the activity of raising of man-made forest or rearing of seedlings or plants shall be
deemed to be business;
(ii) any transaction of sale or purchase of capital assets pertaining to such service, trade,
commerce, manufacture, adventure or concern shall be deemed to be a transaction
comprised in business;
(iii) sale or purchase of any goods, the price of which would be credited or, as the case
may be, debited to the profit and loss account of the business under the double entry
system of accounting shall be deemed to be transactions comprised in business;
(iv) any transaction in connection with the commencement or closure of business shall
be deemed to be a transaction comprised in business;
GOODS
Section 2(12) defines “goods” means every kind of moveable property not being
newspapers, actionable claims, money, stocks, shares, securities or lottery tickets and
includes live stocks, growing crop, grass and trees and plants including the produce thereof
including property in such goods attached to or forming part of the land which are agreed to
be severed before sale or under the contract of sale;
SALE
According to section 2 (24), “sale” means a sale of goods made within the State for cash or
deferred payment or other valuable consideration hut does not include a mortgage,
hypothecation, charge or pledge; and the words “sell”, “buy” and “purchase”, with all their
grammatical variations and cognate expressions, shall be construed accordingly;
Explanation,-—For the purposes of this clause,—
(a) a sale within the State includes a sale determined to be inside the State in accordance with
the principles formulated in section 4 of the Central Sales Tax Act, 1956;
(b) (i) the transfer of property in any goods, otherwise than in pursuance of a contract, for
cash, deferred payment or other valuable consideration;
(ii) the transfer of property in goods (whether as goods or in some other form) involved
in the execution of’ a works contract;
20
(In the above clause (b) (ii) for the words ‘works contract’ the following words
are inserted by Maharashtra Act No. XXXII of 2006 Dt.05.08.2006)
(ii) the transfer of property in goods (whether as goods or in some other form)
involved in the execution of’ a works contract including, an agreement for carrying out
for cash, deferred payment or other valuable consideration, the building, construction,
manufacture, processing, fabrication, erection, installation, fitting out, improvement,
modification, repair or commissioning of any movable or immovable property.
(In the above clause (b) (ii) for the words ‘works contract namely’ the words
‘works contract including’ are inserted by Maharashtra Act No. XXV of 2007
Dt.06.08.2007)
(iii) a delivery of goods on hire-purchase or any system of payment by installments;
(iv) the transfer of the right to use any goods or any purpose (whether or not for a
specified period) for cash, deferred payment or other valuable consideration;
(v) the supply of goods by any association or body of persons incorporated or not, to a
member thereof or other valuable consideration;
(vi) the supply, by way of or as part of any service or in any other manner whatsoever, of
goods, being food or any other article for human consumption or any drink (whether
or not intoxicating), where such supply or service is made or given for cash, deferred
payment or other valuable consideration:
shall be deemed to be a sale’.
SALE PRICE
According to section 2(25) “sale price” means the amount of valuable consideration paid or
payable to a dealer for any sale made including any sum charged for anything done by the
seller in respect of the goods at the time of or before delivery thereof, other than the cost of
insurance for transit or of installation, when such cost is separately charged.
Explanation 1. The amount of duties levied or leviable on goods under the Central Excise
Act, 1944 or the Customs Act, 1962 or the Bombay Prohibition Act, 1949,
shall be deemed to be part of the sale price of such goods, whether such
duties are paid or payable by or on behalf of the seller or the purchaser or
any other person.
Explanation II. Sale price shall not include tax paid or payable to a seller in respect of such
sale.
Explanation III. Sale price shall include the amount received by the seller by way of deposit,
whether refundable or not, which has been received whether by way of a
separate agreement or not, in connection with or incidental or ancillary to,
the said sale of goods;
PURCHASE PRICE
Section 2(20) defines “purchase price” means the amount of valuable consideration paid or
payable by a person for any purchase made including any sum charged for anything done by
the seller in respect of the goods at the time of or before delivery thereof, other than the cost
of insurance for transit or of installation, when such cost is separately charged;
21
Explanation I. —The amount of duties levied or leviable on the goods under the Central
Excise Act, 1944, or the Customs Act, 1962 or the Bombay Prohibition
Act, 1949 shall be deemed to be part of the purchase price of such goods,
whether such duties are paid or payable by or on behalf of the seller or the
purchaser or any other person.
Explanation II. —Purchase price shall not include tax paid or payable by a person in respect
of such purchase.
Explanation III. —Purchase price shall include the amount paid by the purchaser by way of
deposit whether refundable or not which has been paid whether by way
of a separate agreement or not, in connection with or incidental or
ancillary to, the said purchase of goods;
YEAR Section 2(35): “year” means the financial year.
Annexure-II
Determination of Sale Price (Taxable Turnover) in case of Residential Hotels:
Rule 59, of MVAT Rules 2005, provides that in assessing the turnover of sales of
goods, specified in paragraph (vi) of sub-clause (b) of the Explanation to clause (24)
of section 2, of the residential hotels, providing lodging and boarding and charging a
composite sum, which is inclusive of breakfast or lunch or dinner or, as the case may
be, a combination of all or any of the above, the Commissioner shall determine the
taxable turnover of sales, in respect of any period in the following manner, namely, (a
specified percentage of composite charges): -
(a) Where the composite charges include the charges for breakfast, 5%.
(b) Where the composite charges include the charges for lunch, 10%.
(c) Where the composite charges include the charges for dinner, 15%.
(d) Where the composite charges include the charges for breakfast and lunch, 15%.
(e) Where the composite charges include the charges for breakfast and dinner, 20%.
(f) Where the composite charges include the charges for lunch and dinner, 25%.
(g) Where the composite charges include the charges for breakfast, lunch and dinner,
30%.
Provided that, if the claimant dealer produces evidence to the satisfaction of the
Commissioner that the component of the taxable turnover of sales in the composite
sum is less than the percentage given above, the Commissioner shall reduce the above
percentage to the extent of actual sum of turnover of sales, so proved.
22
Annexure-III
Composition Scheme for Hotels (Restaurants), Clubs and Caterers
Eligibility: (a) Hotels, Restaurants, Eating House, Refreshment Room, Club or
Boarding Establishment. (Having gradation of less than Four
Stars)
(b) Factory Canteens
(c) Caterers
Applicability: In respect of aggregate sales of Food and non-alcoholic drinks.
a) Whether Served for consumption at or immediate vicinity or
supplied by way of counter sale by such hotel, restaurant,
eating house, refreshment room, club or boarding
establishment.
(b) Served for consumption at such factory canteen.
(c) Served for consumption at any place other than a hotel,
restaurant, eating house, refreshment room, boarding
establishment, factory canteen, or any club by a caterer.
Composition Amount: 5% of Turnover of Sales
Conditions: (1) Application in Form No. 1 (Form 2 for Caterers), on or
before 30th
September 2005. (New dealers: at the time of
registration).
(2) Option cannot be changed during the same financial year.
(3) Not entitled to claim any setoff or refund.
(4) Not entitled to issue Tax Invoice. Cannot collect tax
separately in his bill/cash memo.
Notes:
• There is no turnover limit.
• It covers aggregate of all sales whether tax free or taxable.
• There is no prohibition that permit rooms cannot opt for
this scheme. However they shall pay tax at prescribed rate
on sale of liquor.
23
Annexure IV
Clarification on certain aspects in respect of levy of Luxury Tax.
(Extracts from the Circular No. 20T of 2005 dated 23/09/2005, issued by the Commissioner
of Sales Tax, Maharashtra)
The Maharashtra Tax on Luxuries and Tax by way of Cess on other Facilities,
Services, Enjoyments, Utilities, Consumption, etc. Act, 1987, provides levy of tax in
respect of luxury provided in a hotel. Certain queries are received by the Government,
from hoteliers, in respect of levy of luxury tax under the Act. Since the queries are of
common nature, these are clarified as under: -
1) Printed tariff and levy of luxury tax:
It has been the practice of the trade that the actual receipts from luxuries
provided in hotel vary from the printed tariff. This is due to various factors, such
as the competitions among the trade, season etc. It is reported that some of the
officers assess the luxury tax on basis of printed tariff instead of on the actual
tariff charged to customers for the luxury provided in a hotel and queries as to
the correct legal position have been received. It is hereby clarified that the
luxury tax is leviable on the actual turnover of receipts in respect of luxuries
provided in a hotel and not on the basis of printed tariff.
2) Levy of luxury tax on other services:
Department has clarified this issue in Circular No. 18 of 1988, dt. 20.05.1988.
The list of services which do not form part of the luxury provided in a hotel, as
enlisted in the said circular, is reproduced below: -
------------------------------------------------------------------------------------------------
Sr. No. Services rendered
--------------------------------------------------------------------------------------------------
1 Telephone calls and trunk calls.
(These charges are based on the actual calls made).
2 Laundry services (i.e., washing clothes).
3 Valet services (i.e., dry cleaning and pressing clothes).
4 Limousine services
(i.e. use of a limousine- charges are dependent on the duration of use).
24
5 Air mail services- charges, therefore, are for postal expenses incurred
for the customers.
6 Health club services- the charges are on the basis of the standard rates
of the club prevailing at the time of use.
7 Secretarial services (i.e., use of conference rooms).
8 Photocopy/ Xerox machine services- charges for these services depend
on the actual number of copies made for the customer.
9 Tele-fax Services ( pertain to the reproduction of documents in any
part of the world as desired by the customer).
10 Courier service- for delivering letters, parcels, packets to the location
specified by the customer.
11 Telex services- the charges are based on actual utilization of telex
machine.
It is further clarified that, if the charges for above listed services are
optional, over and above the tariff, on the basis of actual services availed of
and shown separately in the bill, then the luxury tax is not payable on
receipts from these services; but if any of these services are included in the
tariff without option to the customer or if the bill is inclusive of the above
listed services, then the luxury tax is payable on such composite receipts
shown in the bill.
3) Dormitory:
In the dormitory the person is charged only for one bed. If the charge for
one bed is Rs. 200/- or below, then luxury tax is not payable and if the
charge for one bed is above Rs. 200/-, then luxury tax is payable on the
receipts there from by the hotelier.
* * * * *